Smart-Stock.net

According to the New York Post, foreign investors have begun purchasing billions of dollars worth of foreclosed American real estate.  It’s not hard to see why. REO (real-estate owned) homes have fallen so drastically in value that they are worth anywhere from 31-80 cents on the dollar.

A foreign sovereign (state-owned) fund from Adu Dhabi is one such investor, and has begun investing in distressed U.S. real-estate assets.  With a reported $875 billion in assets, this fund has the resources to invest in and make a considerable profit from North America’s foreclosed homes.

Mark Hanson, a consultant for Field Check Group Mortgage, has been hired by an unnamed foreign sovereign fund to search for particularly good foreclosed home accounts.  He is narrowing his search to REO homes.  So far, he has secured an outstanding deal:  a $2 billion package of foreclosed American homes, at 31 cents on the dollar.

While these types of deals might still be unusual, they will become increasingly common as America’s financial market undergoes more bank failures and real-estate woes.

Enoch Lawrence, senior VP of CB Ricard Ellis, sums it up: “This type of bulk buy would make an impact on the market.  They (foreign sovereign funds) are in a unique position because they have a long time horizon to invest and a cheap cost of capital.  It’s actually a perfect time for them to acquire these REO assets.”

It’s not just foreign sovereign funds that stand to profit in this market.  If you read more of this blog, you will see notable examples of shrewd U.S. investors scoring audacious deals.  If you want to maximize your profits during this economic downturn, you’d be wise to consider working with like-minded investors.